How Safe Assets Became Investors' Biggest Risk
"Risk-free" is the most important concept in financial markets because it's the baseline for setting the value of pretty much everything. Now the pandemic has drained it of meaning.
Shortages of basic goods are sparking protests in Sri Lanka, but the nation’s stock market is going strong.
Photographer: Ishara S. Kodikara/AFP
Markets are weird right now. The value of risk-free assets has gone all out of whack, and if that doesn't seem scary, keep reading.
Sri Lanka is facing a debt crisis, and yet its stock market is up more than 60% in the last year. The Federal Reserve is getting ready to hike rates to combat inflation, and the higher interest rates move, the lower stock prices should be. The S&P 500 may be down the last few weeks, but it’s still up more than 20% for the last 12 months.